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Most people understand that government programs—whether in the form of public schools, Medicare, disaster relief, crop subsidies, or a myriad of other things—cost money. High rates of taxation are the price we pay for the social goods that flow from the welfare state. Less obvious is the price that the state’s largesse exacts on personal liberty.
Liberty imperiled. In America today we are witnessing a dramatic example of how the liberal welfare state combines with the civil litigation system to deprive citizens of their freedom. Governments are suing industries—the makers of cigarettes and guns thus far, but the list is sure to grow—ostensibly to recover the costs of social services rendered in connection with these products and the behavior they engender. But in addition to raising revenue, a secondary purpose of this litigation is surely to drive the targeted products from the marketplace. After all, the reasoning goes, administering to the pathologies they produce costs the state money.
Filing lawsuits against manufacturers, ostensibly to "recover costs," is doubtless a clever way for poll-driven politicians to generate revenue without raising taxes—and eventually to remove targeted products from the marketplace altogether.
Government officials, of course, have at their disposal more conventional means of deterring behavior; they may, for example, enact laws that prohibit the behavior in question and provide penalties for violations. Similarly, the government may ban the products associated with unacceptable behavior, or tax them prohibitively on the theory that decreased affordability will lead to less usage, less pathology, and hence the dispensing of fewer government services. But for the government to do these things in a democratic republic such as ours, the necessary legislative majorities must be assembled in Congress or the states. Therein lies the rub, because legislative majorities do not presently exist to ban or prohibitively tax either cigarettes or guns.
Enter the government "recoupment" lawsuit. Lawmakers determined to make public policy in the absence of democratic consent are nothing if not resourceful. A new kind of government tort action—the so-called recoupment lawsuit—has lately become a potent means by which the state suppresses behavior of which it disapproves. This may indeed be the logical end-point of paternalistic government, where the professional politicians and bureaucrats who administer the benevolent welfare state say to the citizens they claim to serve, "We will take care of you, but you must give up self-government and live by our rules." Their audacious strategy was adumbrated with remarkable candor by former Clinton administration Labor Secretary Robert Reich, who heralded the dawn of a new era of "regulation through litigation" in the pages of USA Today.1
Filing lawsuits against manufacturers, ostensibly to "recover costs," is doubtless a clever way for poll-driven politicians to generate revenue without raising taxes—and eventually to remove targeted products from the marketplace altogether. But it is also deceitful and underhanded, if not blatantly unconstitutional. We live under a limited form of government, which may act to restrict liberty only with the consent of large, stable popular majorities, and in deference to individual rights protected by the Constitution. Regulation-through-litigation is at war with that precept.
The Litigation Fairness Act. A partial solution to the threat posed by government recoupment suits comes in the form of the "Litigation Fairness Act of 1999" (SB 1269), a bill recently introduced in the Senate by Mitch McConnell (R-Ky.). The measure provides that in any civil action in which the federal or a state government seeks to recover from a defendant any "benefits or services the United States or such State has provided or paid for," the government plaintiff shall be "subject to the same procedural rules and substantive law (including notification requirements, limitations, and affirmative defenses) that would apply to a claim brought against such defendant by the person on whose behalf the benefits or services were provided or paid..." Under this measure, government entities would be in the same position as private insurance companies that wish to recover costs stemming from the payment of claims to insured parties harmed or injured by a defective or malignant product. In such situations, the insurer must "stand in the shoes" of the individual who was directly injured. The law allows the insurer to join the injured party’s tort claim against the wrongdoer, but it may not bring a separate, independent claim, or a greater claim, than the injured party.
The Litigation Fairness Act recognizes the existence of this traditional tort rule—known in legal parlance as "subrogation"—and codifies it as a federal statute. The Act pointedly guarantees to defendants any "affirmative defenses"—the doctrines of "contributory negligence," "comparative fault," or "assumption of the risk," for example—that would normally be available in civil actions. The Act would thus serve as a prophylactic, preventing legislatures and courts from unilaterally altering traditional tort rules to transform government plaintiffs into invincible "super-plaintiffs."
Maintaining traditional tort rules. The Litigation Fairness Act is less a "tort reform" bill than a tort maintenance measure. Under its terms, a government plaintiff will have to jump through the same legal hoops as other third-party plaintiffs, such as insurance companies and employers. And because the government’s third-party claim would necessarily focus on the circumstances that led to the alleged victim’s injury, a defendant could show, for example, that the injured party in whose name the government now seeks to recover its costs was himself partly or wholly responsible for his injury.
The effect of the Litigation Fairness Act, then, will be to make "regulation through litigation" somewhat more arduous than might be the case if such a "tort maintenance" safeguard were absent. And in that way, the Act protects individual liberty from overweening government and helps shore up constitutional government.
1Robert Reich, "Regulation is out, litigation is in," USA Today, February 11, 1999.